Falling power and energy prices over the past year have benefited consumers but hurt producers. Weak global economic growth, particularly in the US and China, has decreased demand and pushed down prices for crude oil, gas, and coal. Unusually cold and stormy weather in the UK in June increased residential gas usage but decreased industrial usage. Overall, lower energy costs have provided a temporary boost to the British economy. Future price movements will depend on developments in the Eurozone crisis and economic performance of the US and China.

1. Tough financial forces plus bad summer weather
appear to be determined to test and take charge
of the wholesale power supply marketplace.
Prices tumbled throughout the middle of June to brand-new lows. Annual gas costs are now
15% lower than the same time last year, whilst yearly power prices fell to a two-year low and are
22% down year-on-year.
Falling power costs dragged yearly spark spreads down 7% to £3.4/MWh, and even
which reliable stalwart coal is having a hard time of points, with slipping costs buffering the fall
of dark spreads slightly to a £17.9/MWh premium to spark spreads.
So what's been setting off these price crashes? Well, concerns regarding debt in the Eurozone
countries hasn't aided. Greece lurches from crisis to crisis and even the election of a fresh
government is doing small to allay worries regarding its long-term future. But it's slowing
economic development in the US and China which has really forced international energy
markets downwards. Brent Ameratex Energy Crude Oil tumbled to $97.6/bl, its lowest level
because January 2011, and annual API coal dropped to a brand-new 20-month low of $95.4/t.
But, all of this is advantageous news for consumers. While you could be missing out on which
'BBQ summer' the forecasters promised us, both domestic plus commercial end-users have
seen vitality prices drop in real terms. A fall inside inflation has moreover aided to stabilise the
retail market, however, the big difference has been at the pumps, where motorists have finally
started to see the numbers found on the forecourts going down rather of up. This, combined
with lower electricity plus gas costs, has provided the British economy a short respite, during
that it has a chance to push up production plus keep the delicate heart of UK PLC beating for a
while longer.
Ironically, it's been the biomass market that has held the fort. Despite biomass contracts
dropping, with prices for 2013 down 1% to £88.5/t, costs are still around 6% high than
this time last year. They've recovered from their four-year low and are at their highest level for
five months. This boost has been assisted inside no little measure with the approval of the plans
for a 40MW staw-fuelled biomass plant in Snetterton, Norfolk, that have finally been provided
the go-ahead.
The real headline grabber throughout June and into July has been the atrocious weather the UK
has experienced. Lower than average June temperatures plus storm after storm has resulted
inside a rise inside UK gas demand. Supply peaked at 223.1mcm on 11th June, in the center of
the bad weather. Industry watchers believe that the unseasonably bad weather has encouraged
many people to do anything they wouldn't normally do inside June - they turned the heating up.
The outcome was that though the national system decreased 0.1%, the regional program
climbed 2.2%. To date, summer demand (measured from April 1st) was down 7.8% on the
national system yet up a staggering 31.1% on the regional system, compared to the same time
last year.

2. What this indicates is that while gas demand for energy generation is down year-on-year, usage
by households and tiny businesses has risen. This means that gas expenditure is acting as a
barometer for the productiveness of the UK economy and whilst the big users will be struggling,
homes plus companies are continuing to ride out the worst of the financial storm, placing a more
positive face on what has been a difficult limited months.
How prices will fare in the next limited weeks depends three aspects - the resolution (or
otherwise) of the Eurozone crisis, and the economic condition of the US plus China. If they
begin to wobble we can see prices start to climb back up again.